This September, the stock market acted just as we expected. Usually, September is a tough month for the S&P 500, and this year was no different. Investors may well be wondering therefore: “Is October going to bring some relief?”

There is somewhat of a stigma surrounding October: financial crashes like the Panic of 1907 add to the negative associations; or the haunting Black Monday of 1987, when the Dow plunged 22.6% in a single day. However, looking at an overview of the last century, October does in fact ultimately reflect a net positive outcome.
 

Time for Take-Off?

October kicks off the last quarter of the year, a time when companies and individuals are busy refining their financial positions and seeking rewarding investment avenues. This surge in financial activities often boosts the stock values of financial giants like JPMorgan or Goldman Sachs.

The seasonal chart of JP Morgan Chase over the past decade reveals noticeable peaks during October and November, due to an increase in financial activities. This financial powerhouse has consistently delivered impressive results. For instance, between October 13 and December 03, there has been an astonishing 11.43% rise within a mere 35 trading days!

While it is essential to note that past performance doesn’t guarantee future results, the regularity of these peaks since 2013 hints at a pattern that’s hard to ignore. It seems like JPMorgan has been on a winning spree, making its investors happy.

Seasonal Chart of JP Morgan Chase over the past 10 years

Source: Seasonax – Click the link http://tiny.cc/Seasonax-JPMorgan to access an interactive chart.

Unlike regular charts, a seasonal chart doesn’t display price over a set time, but shows the average trend over several years. The horizontal axis represents the time of the year, and the vertical axis shows the % change in price (indexed to 100). The prices reflect end of day prices and do not include daily price fluctuations.
 

Pfizer: Capitalizing on Health Consciousness

October also marks the start of a good season for the healthcare sector. Pfizer, for example, often gains momentum with the arrival of the flu season, seeing a spike in vaccine and medication sales. The shift towards preventive healthcare, and a preference for trusted brands, makes Pfizer an attractive option.

Seasonal Chart of Pfizer over the past 10 years

(Click on image to enlarge)

Source: Seasonax – Click the link  http://tiny.cc/Seasonax-Pfizer to access an interactive chart.

Over the last ten years, Pfizer has displayed a consistent trend, providing a healthy 9.85% return on average between October 14 and December 1.

Another health giant Johnson & Johnson also sees a boost, due to heightened demand for healthcare products as fall and winter approach.
 

Current Market Vibes

As we step into the upcoming weeks, there seems to be no red flag signaling a market crash. Nevertheless, keeping a keen eye on the ripples caused by climbing interest rates and the ongoing energy crisis is wise. Also, with many Americans paying their first student loan bills since 2020, a drop in consumer spending is likely, as more funds are channeled toward clearing debts.

However, examining the 4-year election cycle reveals that, since 1999, pre-election years have consistently witnessed positive gains for the S&P 500 during the month of October. Typically, stocks experience an above-average surge in the year leading up to an election. This trend is largely attributed to economic policies implemented before an election, as rising stock prices tend to cast the incumbent political party in a favorable light.

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